U.S., India hit relationship 'reset' button, pledge more cooperation

WASHINGTON, Oct. 1, 2014 – The first meetings between President Barack Obama and India’s Prime Minister Narendra Modi in Washington this week seemed to help forge a bond between the two world leaders and produced a lengthy list of projects in which both countries could cooperate – ranging from national security issues to energy and infrastructure – just to name a few.

The leaders endorsed the first “Vision Statement for the Strategic Partnership” as a guide to “strengthen and deepen cooperation in every sector” over the next 10 years, along with a new mantra for the relationship, “Chalein Saath Saath: Forward Together We Go.”

But few details emerged on how two of the world’s largest superpowers would resolve the thornier issues regarding trade, investment and intellectual property that have frustrated so many U.S. government officials, lawmakers and businesses.

Just last Wednesday, Senate Finance Committee Chairman Ron Wyden, D-Ore., and Ranking Member Orrin Hatch, R-Utah, and House Ways and Means Committee Chairman Dave Camp, R-Mich., and Ranking Member Sander Levin, D-Mich., sent a letter to the U.S. International Trade Commission (ITC), requesting the ITC conduct a second investigation into what they said were India’s unfair trade practices that discriminate against U.S. exports and investment. In August 2013, the ITC launched its initial investigation into the same charges, at the request of the two panels. A report is expected to be sent to the committees by Nov. 30.

In its examination, ITC said it “will enumerate restrictive trade and investment policies that India maintains or has recently adopted, determine which sectors of the U.S. economy are most affected by these policies, and describe the competitiveness of Indian firms in these sectors. The ITC will provide several case studies of U.S. firms or industries that have been particularly affected by India's restrictions.”

On Thursday, the Alliance for Fair Trade with India sent a letter to the White House to underscore the importance of fewer words and more deeds by the Indian government.

“Since taking office, Prime Minister Modi has declared India ‘open for business’ and promised to incentivize investment and ‘give the world a favorable opportunity’ to trade with and produce in India. If these bold statements can be translated into concrete action, it will be to the benefit of both our countries. …” noted the 15-member alliance, which includes the National Foreign Trade Council, the Association of Equipment Manufacturers, CropLife America and the Biotechnology Industry Organizations.

“Thus far, however, the new Indian government has pursued troubling policies of its own. In particular, the government abrogated the commitment India made at the World Trade Organization ministerial in Bali in December 2013 and thereby blocked the implementation of a global Trade Facilitation Agreement (TFA) agreed to unanimously by all 160 members of the WTO, a move that threatens to undermine the global rules-based trading system.” The group said Obama’s meeting with Modi would be a “critical opportunity to press for concrete action and real results that can drive economic growth in both our countries.”

Hopes have been high that Modi, elected just four months ago in the largest democratic election ever held in his country, would have such strong majority party support that he would be able to start tearing down long-standing barriers to U.S. trade and investment. And a joint statement issued by the U.S. and India on Tuesday seemed to provide positive reinforcement and direction for resolving at least the TFA issue.

“The leaders discussed their concerns about the current impasse in the World Trade Organization and its effect on the multilateral trading system, and directed their officials to consult urgently along with other WTO members on the next steps,” according to the joint statement.

Among other things, the two leaders established a group to advance the implementation of civil nuclear energy cooperation in order to realize early their shared goal of delivering electricity from U.S.-built nuclear power plants in India. They agreed to strengthen and expand the highly successful U.S.-India Partnership to Advance Clean Energy (PACE) through a series of priority initiatives, including a new Energy Smart Cities Partnership to promote efficient urban energy infrastructure. They also agreed on a new program to scale-up renewable energy integration into India’s power grid, and pledged to cooperate to support India’s efforts to upgrade its alternative energy institutes and to develop new innovation centers. Expansion of the Promoting Energy Access through Clean Energy (PEACE) program, and the formation of a new Clean Energy Finance Forum to promote investment and trade in clean energy projects were also agreed to. (For a fact sheet on energy and climate, click here.)

Obama and Modi also noted the success of their countries’ collaboration on agricultural innovation in three African countries. They announced a new agreement to expand joint development initiatives in third countries in a range of sectors, including agricultural productivity, clean energy, health, women’s empowerment and disaster preparedness.

But prior to arriving in Washington, Modi made clear that he that would be watchful of his own economic and political sectors, including agriculture where he has pledged to farmers that they will receive government assistance to ensure higher profits.

”We want to develop our economy on the pillars of agriculture, manufacturing and service sectors. We want to create a balance among all three," Modi said while speaking at the Council on Foreign Relations in New York.

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